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Tuesday, September 28, 2010

U.S. Proposes New Laws to Control IRAs

The United States government is preparing new laws to take control and even seize private retirement accounts. The proposed law, which is in Congress now, is called the Automatic IRA bill.

S. 1141, the Automatic IRA Act was first introduced in 2007. It is a bill designed to amend the Internal Revenue code of 1986 to allow employees not covered by qualified retirement plans to save for retirement through automatic payroll deposit IRAs, to facilitate similar savings by the self-employed, and for other purposes.

To put it simply, it is designed to control, confiscate and destroy the private retirement system. Similar in concept to the legislation that recently passed that nationalizes health care, this government program has an identical goal with regards to individual retirement plans.

Congressman Richard Neal, D-Mass., has introduced legislation that would allow companies to set up automatic payroll deposit individual retirement accounts, or auto IRAs, for workers who do not have access to employer-provided qualified pension plans.

Jeff Bingaman, D-N.M., introduced similar legislation in the Senate last Friday. In Bingaman's bill, employers would receive a $250 tax credit for each of the first two years that the plan was in operation, even if they contributed nothing to the accounts. However, companies that failed to offer an automatic IRA option to employees would be subject to an excise tax of $100 for each employee who was supposed to be covered. Employers who made an error would have the opportunity to self-correct.

The problem, according to David Salisbury, president of the Employee Benefit Research Institute is that "a very substantial portion of those workers without a retirement plan at work are low-income people.” This means that African Americans, who generally do not invest, will be subjected to the will of people who will not have their best interest at hand. In addition, given that many blacks do not know or understand investing, they will likely accept advice from the government on what to invest in without question.

The concept was proposed in President Obama’s budget and supported by the Middle Class Task Force chaired by Vice President Joe Biden.

However, as it reads, it is not hard to discern why many feel that the Auto IRA is the first step towards controlling a person’s retirement assets and replacing our private system with a forced, government controlled Social Security type of program. Moreover, seeing that it would be government run, the feds would decide where or how to invest your money, rather than the individual making that decision. This means that the government could decide to purchase junk Treasury bonds to bolster a weak dollar or pay down the national debt. Thus subjecting an individual to confiscatory levels of taxes and penalties that will even target previously taxed Roth IRA accounts.